DENVER – China has rocked the US feed grain export market over the past year, buying massive amounts of US soybeans, sorghum and corn. Thanks to a favorable exchange rate, China increased its purchases from the United States to meet the demand for feed for its rising pork production and to compensate for the reduction in supply from Brazil. China’s accelerated grain demand is expected to continue, although its purchasing habits are changing in response to the dynamics of the US grain market.

According to a new report from CoBank’s Knowledge Exchange, the outlook for continued US grain exports to China remains strong, mainly due to expected growth in pork production and continued demand for feed grains. However, the current grain cycle in the United States has entered a new phase marked by significant price volatility, and China is taking advantage of this volatility to its advantage.

“China will remain an active buyer of US grains at least through MY 2021-22,” said Kenneth Scott Zuckerberg, chief grain and agricultural supply economist at CoBank. “But increased grain price volatility has led China to shift its buying habits to wait for low prices before committing to additional purchases, as well as contracting now for the next marketing year. “

Increased demand from China led to record grain prices that peaked in May and have since been extremely volatile. A period of high price volatility, coupled with an ongoing inverted futures curve, means grain elevators and merchandisers will need capital discipline and excess liquidity, Zuckerberg noted.

So far in 2021, the United States has already exported 57.1 million metric tonnes (MMT) of soybeans, corn and sorghum to China. This is a dramatic increase from the 15.5 MMT bought by China during the same period in 2020 and 7.9 MMT bought in 2019. Adding to the momentum, China has already contracted for 10 , 7 MMT of corn from the new harvest and 3.0 MMT of soybeans to be delivered after harvest. and recorded during the 2021-22 crop marketing year.

“Unless canceled, these orders give confidence that US feed grain exports to China will continue to be strong over the next six months,” Zuckerberg said.

Since May 2020, China has aggressively purchased soybeans and corn as animal feed to replenish its national pig population following a devastating outbreak of African swine fever. While the slaughter of pigs in China has declined in 2019 and 2020 due to AFS and COVID, the slaughter is expected to increase significantly in 2021. USDA predicts that the slaughter of pigs in China will reach 520 million head in 2021 after falling to 460 million last year.

The University of Missouri’s Food and Agricultural Policy Research Institute went even further, recently increasing its estimate of pig slaughter in China in 2021 from 520 million head to 630 million, a 21% increase. which would precipitate a similar increase in demand for grain.

Per capita consumption of animal protein in China has nearly tripled over the past 40 years, with pork accounting for most of the growth. China imports the majority of grains used in pork production.

“The combination of stable hog production, higher slaughter rates and favorable currency winds suggests that the Chinese appetite for US feed grains will remain strong,” Zuckerberg said.

Read the report, Feeding the Hungry Dragon: China Changes Buying Tactics in Volatile Phase of US Grain Run at

Source link

About The Author

Related Posts